Boeing re-creating local plants in S.C.

Originally published October 29, 2009 at 12:01 am
Updated October 30, 2009 at 1:13 pm

By 2016, Boeing's East Coast complex will grow to more than 6,400 employees due to the company's decision Wednesday to put a second 787 Dreamliner assembly line in Charleston, S.C., rather than in Everett.

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By 2016, Boeing’s East Coast complex will grow to more than 6,400 employees due to the company’s decision Wednesday to put a second 787 Dreamliner assembly line in Charleston, S.C., rather than in Everett.

It will include, on a smaller scale, the full range of airplane-making capabilities found at Boeing’s Puget Sound-area factories.

According to interviews with negotiators for both Boeing and the Machinists union, the two sides couldn’t reach agreement on key issues on extended compensation packages and two union requests that management said were showstoppers.

U.S. Sen. Patty Murray, who acted as an intermediary late in the process, said the two sides “weren’t that far apart” and the gap could have been closed.

“The offer from the Machinists I thought was close to what Boeing needed,” the Washington Democrat said. “I thought they would go back and make more concessions. But I don’t believe they ever got a response to it.”

That opportunity disappeared completely Wednesday. The result is boomtime for Boeing Charleston.

The Charleston site already has 2,600 workers in two facilities that spin composite 787 fuselage barrels and assemble them into large aircraft sections. Boeing now owns one outright and is interested in buying out its 50-50 partner in the second plant.

Now Boeing will add a mini-Everett and a mini-Auburn: a parallel to the final-assembly plant for the 787, and an equivalent to the Auburn fabrication unit where skilled workers can turn out any needed part at short notice, said Doug Kight, Boeing’s vice president of human resources and one of the lead negotiators in the talks with the International Association of Machinists (IAM) union.

Boeing has committed to the state of South Carolina that it will add 3,800 new jobs within seven years.

Kight said about 1,000 of those will be production workers. The rest will be engineers, management, sales and support and administrative personnel.

“We feel confident we can meet the figure,” he said.

Asked if some of those jobs might be on programs other than the 787, Kight said the selection of Charleston “is not a decision for any other product line.”

Running by 2011

Kight said the goal is to have the new facility in Charleston up and running by 2011, with the first airplane rolling out in 2012.

Boeing will also paint, flight test and deliver the airplanes from there.

For the first two to three years of 787 production, Kight said, there will be a surge of production in Everett to ensure the successful introduction of the 787-9, the first derivative model of the 787 after the initial 787-8.

After that, he said, the production surge in Everett will be phased out and moved to Charleston.

But Kight said Everett will still have most of the 787 production work.

Boeing aims to ramp up to 10 planes a month by 2013. The plan now is to produce seven planes a month in Everett and three a month in Charleston, Kight said.

“Clearly, you can take three a month higher if you need to,” he added.

The intention is that the larger model 787-9 will be built in Everett, while Charleston focuses on the 787-8, Kight said.

In a similar vein, Boeing Commercial Airplanes CEO Jim Albaugh tried to reassure local employees in an internal message Wednesday.

“We are adding jobs in South Carolina, not taking them away from Puget Sound — which is and will continue to be — our center for design, flight test and manufacturing,” Albaugh wrote.

Still, it’s clear that Charleston has strong growth potential.

Rich Michalski, IAM general vice president and lead negotiator for the Machinists, said that growth could come at the expense of the Puget Sound area.

“When they are in full production (in Charleston), with all the support services, the machining, the fabrication, I think you are talking about a large chunk of people,” said Michalski.

“Does this open the floodgates? Absolutely. I’m sure that’s why they didn’t want to commit to anything to do with keeping jobs in Puget Sound.”

Big obstacle

The union had asked for a commitment to put future work here in exchange for a long-term no-strike commitment through 2020.

That was the first showstopper for Boeing; the second was an IAM request that the company adopt a position of union neutrality instead of opposing labor organizing drives in its facilities.

“We told them, if those are on the table, there cannot be a recommendation to the board of directors to put a second line in Everett,” Kight said.

When the long, behind-the-scenes saga of the competition for the 787 Dreamliner second line finally came to a close Wednesday, the union had offered a no-strike agreement through 2020 and declared its willingness to continue bargaining and potentially to give further economic concessions.

Last Saturday, Michalski sent that clear message to Boeing’s leadership through the company’s senior vice president for government operations, Tim Keating.

“I said we are willing to modify and talk about wages and bonuses and the whole thing on a moment’s notice,” Michalski said of his discussion with Keating.

But he never got the chance to bargain further. Michalski didn’t hear directly from the company again until Wednesday, when he was told the Charleston announcement was imminent.

“We came a lot further than I ever thought we would agree to,” said Mark Blondin, the IAM’s national aerospace coordinator and former president of Machinist District 751.

Michalski and Blondin, as well as district President Tom Wroblewski, all complained bitterly that throughout the talks, over many weeks, Boeing never offered counterproposals and instead effectively asked the union just to better its own offer.

Responding, Kight denied that and insisted “there was no lack of clarity, no lack of dialogue.”

“We told them on each issue where they needed to be,” he said.

And why did Boeing close the door when the union was still willing to bargain?

Deadline time

Two days ahead of its board meeting last Monday, which was the deadline Boeing had set, Boeing was unwilling to indulge the kind of last-minute brinkmanship that has been typical in all recent contract negotiations with the IAM, Kight said.

“We had to draw the discussions to a close,” Kight said. “We gave them full and fair opportunity.”

The result of those failed talks is delight in Charleston, and renewed labor tension in the Puget Sound region.

Tom Buffenbarger, IAM international president, said Boeing’s negotiating tactics suggest to him the company intended to pick Charleston for some time.

“This was all a ploy to paint us as the bad guys and to play their hand as hard as they could (for incentives from) South Carolina,” he said.